Investors Ready for the Stock Market Holiday Drive
Has the downside comeuppance been pushed into 2014?
Editor's Note: Todd posts his vibes in real time each day on our Buzz & Banter.
That loud, collective sigh you hear is the sound of the Street sliding back into its turret for the home stretch of 2013. After the long "Thanksgivvukah" weekend, one that appealed to football fans and foodies alike, it's time to hunker down for the final 20 sessions of the year.
Apropos of the Morgan Stanley (NYSE:MS) note this morning -- "The only thing people are worried about is that no one is worried about anything. That isn't a real worry..." -- the conditioned complacency continues to continue on the corners of Wall and Broad.
The Dow Jones Industrial Average (INDEXDJX:.DJI) is up 23%, the S&P 500 (INDEXSP:.INX) is up 27%, and the tech-heavy Nasdaq (INDEXNASDAQ:.IXIC) is 34% higher on the year. At this point, there are two camps: those who are participating (and counting the days until they get paid) and those who are underperforming (and looking for opportunities to play ketchup).
Just as markets that are strong all day (with 2:1 positive breadth) tend to end that way, tapes that are strong all year (with similar internal readings) are apt to finish with some moxie. Nothing is guaranteed of course -- the path of maximum frustration, coupled with the tendancy of news to be "best" at tops, introduces the potential for a trapdoor to be nestled somewhere within the next three weeks -- but if there wasn't risk, it would be called "winning," not "trading."
Looking out to 2014, I can't shake the sense there will be a harsh downside comeuppance in the first quarter, potentially in February. The missing link, at least thus far, is the catalyst, although it could be a ratchet higher in rates despite the best efforts of the Federal Reserve to keep them artificially low.
Given the fact that the most important market metric is psychology, it will be interesting to watch the reaction of the masses when the perceived omnipotence of policymakers is called into question.
That and $2.50 will get you on the subway, I know, but file it away for a rainy day.
I continue to watch Twitter (NYSE:TWTR) on the long side and Facebook (NASDAQ:FB) on the short side, most likely on a pairs trade, if and when. I'm in no rush, as proactive patience has served me well throughout my career.
Market breadth is 9:5 negative despite the firm tone -- although the banks are again outperforming.
Last night, my wife asked me, "Haven't we watched enough football this weekend?" Um, no.
Personally, I think the Amazon (NASDAQ:AMZN) drones are creepy and dangerous, but I may be showing my age here. And how would they deliver to big cities?
- If ever there was a year for a BCS play-off system, this would be it.
We flagged the potential dandruff in gold last week and it's down a deuce (2%) today; remember, it has room to $1,065 on a pure technical basis, and gold $1,250 now morphs into resistance.
My family bought me an acoustic guitar for the holidays, which is something I've always wanted to learn how to play. Maybe it's not too late to teach this old dog some new tricks.
S&P 1800 is psychological support, S&P 1775 is a technical support, and S&P 1730 is the meaningful line in the sand, if and when.
I've spent 15 hours at the dentist the last two weeks, and countless more hours being thankful for the teeth I once took for granted.
- We recently revamped our 20 trading commandments, lest you missed 'em.
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Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at firstname.lastname@example.org.
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